Behind the scenes Indian government officials have begun to issue warnings against developers proceeding with new plants in the next three years.

Busted coal boom

When it came to office in May 2014 the Modi Government launched a crash-through campaign to boost coal production.

Planning and environmental laws were weakened and massive mine expansions waved through with minimal review.

While Coal India – a government-owned company which produces about 80 per cent of India’s coal – dramatically expanded coal production, it soon found that its biggest problem was a lack of customers.

India’s Coal Secretary, Anil Swarup, recently bemoaned that “Coal India is today running after the client to take coal,” claiming it “doesn’t know what to do” and pointing out that it “had to cut down the production in order to save the coal from burning”.

Bad for producers, good for burners

One of the beneficiaries of the glut is the government-owned power generator, NTPC.

Back in 2014-15 financial year NTPC imported about 16 million tonnes of thermal coal.

Last year it pared this back to 9.5 million tonnes but expects to import only 1 million tonnes this year from a pre-existing contract.

With an estimated 45 million tonnes of coal stockpiled at Coal India mines, NTPC is under increased pressure to use only domestic coal.

“With power demand remaining flat, the situation would not warrant any more coal imports this year,” an anonymous government official stated.

NTPC, which generates almost one-quarter of India’s electricity and estimates it will use almost 170 million tonnes of coal this year, is likely to end coal imports next year and rely on coal supplied from Coal India as well as new mines of its own it is commissioning.

Increased use of domestic coal will deliver yet another shock to the global coal market but will only make India’s air quality worse.

But even NTPC, India’s largest coal power company, has seen the writing on the wall as far as growth prospects for India is concerned.

The Economic Times has indicated that NTPC will alter its expansion plans to focus more on renewables and away from coal, and revise upwards its existing target of 10GW of renewables by 2020.

This will make NTPC India’s largest renewable energy company.

Bob Burton is the Editor of CoalWire, a weekly bulletin on the global coal industry (You can sign up for ithere)